What You'll Learn

1. What is a debit card and how does it differ from a credit card?
2. How and how much you can earn if you use a credit and debit card together.

What is a debit card and how is it different from a credit card?

A debit card is a bank card with which you can spend money and accumulate it. The main difference between a debit card and a credit card is that with a debit card you spend your money, and with a credit card, you spend the bank's money.

You can receive your salary on a debit card, deposit and withdraw funds from it, and use it to pay for goods and services. It is beneficial for the bank that you keep as much money on your debit card as possible. It seems to you that the money is just sitting in your account, but in fact it is not lying around, it is working.

The bank puts the money of its customers in a common pot. He uses this money and earns money in this way, for example, he lends it at interest to other people and organizations. The cauldron is always full: the Central Bank keeps an eye on it. Therefore, you can withdraw money from the card at any time and it will be returned to you without any problems. It's not going to happen that you come to get the money and the bank is like, "I lent it. As they return it to me, so I will give it to you."

It is safe to keep money on a debit card: it is under the protection of the Deposit Insurance Agency (DIA). This government entity insures your money while it is in the hands of the bank.

If, for example, the bank's license is revoked, the DIA will return the insured money to you. The amount of compensation is limited to no more than 1.4 million rubles. The state closely monitors the work of the DIA: the agency reports to the Central Bank and the government.

But the unused credit limit on the credit card is not insured. If you had a credit card with an available limit, you will no longer be able to use this money after the license is revoked from the bank. And what has already been spent from the card, in any case, will have to be returned: the debt does not burn out, even if the bank's license is taken away.

The credit card has the bank's money, and the debit card has yours.

The terms and conditions for using debit cards vary from bank to bank. We'll figure out how to choose the best card in a separate lesson — the most interesting is yet to come. In the meantime, let's briefly tell you what bonuses debit cards have in general.

Debit Card Bonuses

Interest on the balance. The bank uses your money, which is stored on a debit card. He receives the profit and shares it with you: he pays interest on the balance on the card.

Imagine that you have a magic piggy bank. You put 10 dollars in the piggy bank, a month later you look in and the amount has grown. The more they put in, the more they took away. This is roughly how debit cards work with interest on the balance.

How to Make Money on a Credit Card and Debit Card

The idea is simple. Keep your money on a debit card and try not to spend. If you receive your salary, put it on a debit card and let it stay there. The bank will charge interest on the debit card balance.

Pay for purchases with a credit card — the bank will return you cashback from these expenses. When the interest-free period comes to an end, withdraw money from the debit card and close the credit card debt. That way, you don't have to pay interest to the bank. And then spend money from the credit card again.

The main thing is not to go beyond the interest-free period. If you don't like that, you need to be bigger:

It is impossible to go beyond the interest-free period. Outside of it, there are huge percentages.

To earn more, the credit card must have an interest-free period and maximum cashback, and the debit card must have a maximum interest on the balance. The rest of the characteristics of the cards are not very important. For example, if you find a credit card with a lot of cashback, but it has a terrible commission for cash withdrawals, take it.

How the Interest-Free Period Works

The interest-free period is the time when you can pay off your credit card purchases without interest. Recall that it is also called the grace period or grace period. Different banks have different conditions: somewhere they give up to 100 days of interest-free period, somewhere - up to 50, somewhere - up to 70.

The interest-free period does not apply to all card transactions. It often happens that the interest-free period applies to purchases, but not to cash withdrawals and card-to-card transfers.

It all depends on the conditions of a particular bank: somewhere there is one list of allowed transactions, somewhere — another. If you search, you can find cards with suitable rates. There are a lot of suggestions – we will tell you how to choose in the next lesson.

The interest-free period when transferring money from a credit card to your own debit card usually does not apply, but there are exceptions: some banks intentionally allow such transactions and limit the amount of the transfer. We also know of cases where the bank that issued the credit card mistakes such transfers for purchases. We do not advise you to experiment with teleporting money from a credit card to a debit card and back: you can easily violate the terms of the grace period and get interested.

Banks calculate the interest-free period in different ways. There are two main ways: the interest-free period can be determined by the statement or by the first purchase.

You can find out which method works for a particular credit card in the loan agreement, tariffs or from the bank's employees. Such information can also be easily found on the bank's website in the sections "How to repay", "How to use", "How the interest-free period works" or "How not to pay interest".

Let's talk about both methods.

Interest-free period on statement

Most credit cards work on this principle. First, you spend money from your credit card, then the bank sends you a statement of your expenses and gives you time to repay the debt.

Billing period. As long as you spend money with your credit card, the bank counts how much you owe them. In banking parlance, this period is called the settlement period. Typically, the billing period is a month, such as April 9 to May 8. And on May 9, a new billing period begins.

Extract. On the last day of the billing period, the bank sums up all your expenses for the billing period and sends a statement — an invoice for the payment of the debt. This account includes all purchases you made before the end of the billing period. The next purchases will go in the next billing period.

On the day of check-out, one billing period ends, and the next day, another one begins for new purchases.

The statement date is usually the same as the day the credit card was activated. For example, you received your credit card on February 8. On the same day, we went to the mobile application and activated the card so that it could be used. This means that every month on the 8th day of the month, the bank will generate a card statement.

Many banks allow you to change the date of the statement if it is inconvenient for the client. Bank employees will tell you how to do this.

Time to pay. It is not possible to pay on the statement immediately: the bank gives time to repay the debt. In different banks, the duration of the grace period varies: somewhere 20 days, somewhere 10, somewhere 25.

For example, the bank advertises that it gives up to 55 days of interest-free period. Of this period, 30 days is the billing period when you accumulate debt, and 25 days is the time in which you need to pay off the debt accumulated during the billing period.

The length of the interest-free period for each specific purchase depends on the day of the billing period on which you made it.

Therefore, it is better to make large purchases at the beginning of the billing period so as not to return the money for them for as long as possible - they will lie on the debit card and generate income.

How to choose a debit card and credit card

What You'll Learn

1. What to look for when choosing a card.
2. How not to fall for advertising promises and notice the catch.
3. Where to find the latest information on bank cards.

What to look for when choosing a credit card

There is no such thing as a perfect map. If the bank does not ask for money for service, gives a long interest-free period and allows you to withdraw cash, look for a catch. Such a card must have some significant disadvantage, for example, the lack of cashback.

But you don't need a perfect credit card — you need one that you can use to make money. Therefore, only some of the options and characteristics of the map are important. 

Cashback

A card without cashback is not suitable, even if all other conditions are super profitable. A credit card must be able to return a percentage of purchases, otherwise you will not be able to make money on it.

Categories of purchases. The bank can set categories of expenses for which it will return more money than for others. For example, for the purchase of medicines in a pharmacy and gasoline at a gas station, the bank will return 5%, and for all other purchases - only 1%. Such a card is beneficial if you spend a lot of money in higher categories.

To choose the right cashback card, you need to look at what you spend money on. Cards with increased cashback on gasoline are suitable for drivers, for tickets and hotels — for travelers, for restaurants and fast food — for those who do not like to cook.

The main category of expenses for many people is supermarkets. It is almost impossible to find a card with increased cashback for all supermarkets, but it is easy to find a specific one.

Almost all cards have categories of expenses for which cashback is not accrued. These can be taxes, payments for housing and communal services, bets at bookmakers, card-to-card transfers, or something else. The list of expenses for which there is no cashback should be found in a specific bank.

Safety Cheat Sheet

The more you spend on your credit card and the more you save and debit, the more you earn. Therefore, you need to choose a credit card according to the size of cashback and commission, and a debit card - by interest on the balance and commission.

Card conditions are constantly changing — in order to earn, you need to be aware of the changes. 

If you use credit and debit cards correctly, you can get a nice income. Of course, it is not enough for a yacht, an apartment or a car, but for a trip abroad, tires for a car, a game console or an annual membership to a fitness club - easily.

But there are mistakes that can cause you to lose everything you have earned. To prevent them, follow the four simple safety rules in this tutorial – here's our final tip.

Don't spend more on your credit card than you have on your debit card
A credit card is an insidious thing for those who don't know how to control spending. When you don't have a credit card, spending is limited to how much money you actually have. But a credit card removes these limitations: you have the entire credit limit at your disposal, which can be many times higher than your income and savings.

The credit card debt must not exceed the debit card balance. If you have enough money on your debit card at any given time to pay off your credit card debt completely, you're doing everything right.

Even if your employer delays your paycheck or goes bankrupt, you should always have the money to pay off the bank.

For example, you received a salary of 4,000 dollars on a debit card. Of this money, 500 dollars were spent to meet the bank's requirement for minimum spending and receive interest on the account balance. 3,500 dollars left.

In this case, you can lose no more than 3,500 dollars on your credit card. This is your own limit that can only be increased when you have more money on your debit card.
Credit card debt should always be less than or equal to the amount on the debit card.

Do not withdraw or transfer credit money
We have already told you that the interest-free period does not apply to all credit card transactions. As a rule, it is valid for purchases, but not for withdrawals and transfers from card to card.

And here you need to be careful. For example, you come to the market to buy fruit and ask the seller if you can pay by card. He replies that yes, no problem, but does not give a terminal for payment, but dictates the number of his card and asks to transfer money to it. It seems that you have paid for the purchase, but for the bank, this is a regular transfer from card to card - a transaction that does not apply to an interest-free period. Or, for example, you pay for utilities and transfer money to the current account of the management company. This is also a transfer, not a purchase.

For transferring or withdrawing money, the bank may charge you a fee and start accruing interest.

Check with the bank to find out which transactions are not covered by the grace period – this is usually a withdrawal and transfer of money. Do not make such transactions in order not to pay commissions and interest.

Return money to your credit card in advance
In order not to have to pay interest to the bank, you need to repay the credit card debt before the end of the interest-free period. Many people wait until the last day, and then the unexpected happens: the Internet falls off, the phone breaks, the payment does not go through. As a result, there are delays, interest, and penalties.

To avoid such a situation, pay in advance — at least one or two days before the end of the interest-free period. Many banks send customers SMS with payment reminders, but we do not advise you to rely on them too much. It's better to set a reminder on your phone: pay off your credit card debt two days before the end of the interest-free period.

Remember: if you're a few minutes late, you're still late.

Repay your credit card debt in advance. Being a few minutes late is still being late.

Do not take risks with credit money
As long as your money is on your debit card and generating income, you're spending the bank's money — and you'll need to pay it back later. Your debit money brings income on the balance, but it is relatively small: on average, 3-5% per annum.

But all these options are risky. There is always a chance to go bankrupt on such investments, and if this is the same money that you planned to pay with on a credit card, it is better not to risk it.

Don't risk the money you owe to the bank.

Results
Don't spend more money on your credit card than you have on your debit.
Use your credit card to pay for your purchases. We do not recommend withdrawing and transferring money from a credit card: the interest-free period may not apply to these transactions.
Make credit card payments in advance, not at the last minute. The bank makes money on forgetful customers.
If you spend credit funds, then keep your money on a debit card. Do not take risks: you can be left without money, but with a debt to the bank.